Discussion: Distribution Channel One very important decision that marketers need

Question

Discussion: Distribution Channel

One very important decision that marketers need to make is which channels of distribution to use for its products or services. Four primary considerations need to be analyzed before making the distribution choice: Distribution coverage required Degree of control desired Total distribution cost Channel flexibility Discuss the implications of using the Internet on these four considerations. To help analyze the possible implications of the Internet on these elements, visit these sites and consider how each company distributes its products and services differently than traditional manufacturers do: American Airlines' Direct Connect distribution (Links to an external site.) Newegg Inc. (Links to an external site.) Overstock.com Inc. (Links to an external site.) Netflix Inc. (Links to an external site.) Amazon.com (Links to an external site.) Also, visit the following sites and think about the role they play in the new breed of channel intermediaries: DHL Air Freight (Links to an external site.) China Airlines Cargo (Links to an external site.) Federal Express (Links to an external site.) United Parcel Service (UPS) (Links to an external site.) Oracle E-Business (Links to an external site.)

Explanation / Answer

Advantages

Utilizing a direct channel of distribution to connect consumers with your product, especially a Web-based channel, can have many benefits. Web-based selling has low overhead and gives your product a potentially global reach. As no intermediaries share the profits, most direct distribution channels tend to have higher rates of profit than indirect distribution channels. Direct distribution using the Internet is convenient for customers and available 24 hours a day. Also, many customers appreciate the opportunity to give profits directly to producers and artists.

Disadvantages

A direct distribution channel cannot compete with the geographical reach and business volume of a distribution channel that comprises major wholesalers and retailers. If you sell specialty coffee, you cannot sell as much product over you website as you can if you sell through major grocery store chains. Also in direct distribution of tangible products by Internet customers are often asked to shoulder the burden of shipping costs.

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